Murray Goulburn eyes Warrnambool Cheese and Butter
The Warrnambool Cheese and Butter board has advised its shareholders to take no action in relation to the many bids for the company.
It follows this morning's announcement of the Murray Goulburn bid offering $7.50 a share for WCB scrip.
The bid by Murray Goulburn also caught the Warrnambool company offguard.
"WCB was not aware of Murray Goulburn's intention to make the MG offer until it was announced today,” the company said in a statement.
"As a result, WCB's directors are not yet in a position to make a formal response to the MG offer.
"The directors of WCB will meet shortly to consider the MG Offer in detail.
"Until WCB's directors have issued their formal response to the MG offer, shareholders are advised to take no action in relation to their shares."
WCB said its shareholders would have plenty of time to make a decision in respect of offers by MG and rivals Bega Cheese Limited and Canadian firm Saputo Inc.
MG managing director Gary Helou told a media briefing today WCB dairy supplier shareholders faced a choice between selling their shares to a foreign company and taking the farmgate milk price offered or backing the Victorian co-operative's bid and having some control over their destiny.
Mr Helou was speaking after MG announced a $7.50 a share bid for WCB, valuing the company at $420 million.
He said WCB suppliers had an opportunity to create a co-operative large enough to become a top 20 dairy company in the world processing four billion litres of milk.
"We believe this is a very attractive offer," he said.
"We believe there is a lot at stake for the Australian dairy industry."
Mr Helou said a rebadged Murray Goulburn Warrnambool would be a Top 5 food and beverage business in Australia.
"It will have many numerous benefits to farmers," he said.
These included creating a co-operative which "left the profits here at home" and maximising returns to farmers.
MG's bid would match the dividend payments offered by Canadian rival Saputo in its proposal launched last week.
The MG bid was also subject to 50 per cent approval by WCB shareholders and contingent on no objections from the Australian Competition and Consumer Commission.
Its bidder's statement was expected to be mailed to WCB shareholders by mid to late November.
Mr Helou said MG had successfully sought and received finance from its three banks, NAB, ANZ and Westpac Banking Corporation.
He said the company's gearing level was 42 per cent at the end of financial year 2013 but it would rise to 54 per cent in 2014 if the takeover bid was successful.
"We believe we can support that," he said.
"Fonterra was 60 per cent during its growth stage."
Mr Helou said the Australian dairy sector was "very crowded", fragmented and largely foreign owned.
"Unless we arrest this trend, Australia will become a net importer in a few years," he said.
Source: Weekly Times Now, 18 October 2013
